Former LA-based hospital CEO sentenced to prison for Medicare fraud

by KPCC Wire Services

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A federal judge today sentenced the former chief executive of City of Angels Medical Center to two years in prison and ordered more than $4.1 million in restitution for paying illegal kickbacks for patient referrals skimmed from Skid Row transients.

Dr. Rudra Sabaratnam, a 66-year-old Sri Lankan-born Brentwood physician, pleaded guilty in 2008 in U.S. District Court to two counts of health care fraud for his role in a scheme to defraud public health insurance programs by recruiting transients from downtown Los Angeles.

"This is an extremely serious offense,'' U.S. District Judge George H. King said before handing down the defendant's sentence. "He was a very well-established person, yet he took advantage of the system for his own financial gain.''

The investigation that led to the charges was launched after Los Angeles police spotted five patients dumped on Skid Row in October 2006. Authorities later determined those "patients'' were recruited and paid $100 or less for their role in the scheme.

Sabaratnam — also formerly a co-owner of the hospital — admitted paying co-defendant Estill Mitts to refer transient Medicare and Medi-Cal beneficiaries, recruited primarily from Skid Row, to City of Angels for in-patient hospital stays.

"He did this not out of the goodness of his heart ... but out of his own financial interest,'' King said.

Sabaratnam apologized to his family for "my criminal conduct and the terrible shame'' he caused them.

"I have some productive years left and I intend to use them'' to make amends, he said.

John Vandevelde, the defendant's attorney, said his client indeed felt so ashamed that he did not allow family members to attend the hearing.

"He cannot stand the thought that his loved ones will have a picture of him here being sentenced,'' Vandevelde told the judge.

The defense attorney argued that Sabaratnam should be sentenced to home detention rather than federal prison, particularly because he cooperated with investigators after his 2008 arrest.

But Assistant U.S. Attorney Vince Farhat countered that the defendant began helping prosecutors only after charges were filed against him.

King sided with the prosecutor, saying that cooperation "does not simply wipe away'' the severity of this type of crime.

Throughout the scheme, Mitts operated an "assessment center,'' known as the Seventh Street Christian Day Center, in downtown's Skid Row. There, the homeless were paid $100 or less to go to the hospital run by Sabaratnam for medical procedures they didn't need, Farhat said.

City of Angels, a 180-bed short-term surgical and medical facility in downtown Los Angeles, billed Medicare and Medi-Cal for in-patient services for the recruits, including many who had no need for the procedures, Farhat said.

The amount of illegal kickbacks Sabaratnam paid and caused to be paid to Mitts and others was more than $400,000, the prosecutor said.

Mitts pleaded guilty in 2008 to conspiracy to commit health care fraud, money laundering and tax evasion. He is set to be sentenced by King on Nov. 22, along with Dante Nicholson, the hospital's former senior vice president.

Robert Bourseau, a former co-owner of the hospital, was sentenced last February to three years in federal prison for his part in the fraud and ordered to pay part of the $4.1 million in restitution.

That same month, Bourseau and Sabaratnam agreed to pay $10 million to settle a civil lawsuit brought by federal and state prosecutors over the scheme.

Sabaratnam must serve three years of supervised release after he is freed from prison, King said.

The judge gave Sabaratnam until Dec. 6 to surrender to the U.S. Marshals Service to begin serving his sentence.